And why brands charge so much more.
When it comes to lipstick, most women agree: you get what you pay for.
But according to a new report from Stowaway Cosmetics, that’s not exactly true. In fact, it couldn’t be further from the truth.
Hoping to increase transparency in the beauty industry, Stowaway, a brand that specializes in affordable, travel-size makeup products, is lifting the veil on lipstick markups. And ladies, you’re going to want to sit down for this one.
Stowaway reports that on average, that $35 luxury lipstick you love so much only costs $2.50 to make. That’s a huge difference, and it’s true across the board. Most luxury cosmetic brands actually markup their product 10 to 11 times.
“Beauty is the only industry in which I have found that the aphorism ‘you get what you pay for’ isn’t true, and that really bothers me,” Julie Fredrickson, the CEO and co-founder of Stowaway Cosmetics, told Racked.
In a stunning show of goodwill, Stowaway even went as far as to break down the production costs associated with a single tube of lipstick. Ingredients, on average, cost a measly $1; components (tubes, brushes, etc.) require just $0.70; assembly costs $0.38; and shipping runs just $0.10 a pop!
The reasoning behind the inflated pricing is actually pretty complex, explained Fredrickson.
“Cosmetics are marked up so much because conglomerates aren’t just in the ‘sell you great makeup’ business. [Some of these] companies are in the lifestyle and brand business, and because cosmetics are so cheap to make, they use the opportunity to make 90% profit on the makeup they sell you in order to subsidize the rest of their business,” she told Racked. “Your lipstick is paying for everything from really expensive brand campaigns, to unprofitable designer clothes, to the profits for the retailer that sells the makeup to you.”